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The Elliott Management hedge fund has called on GlaxoSmithKline’s management to appoint new directors and whether Emma Walmsley is the right candidate to lead the UK drug maker after a spin-off of its consumer division.
The demands are part of a series of recommendations sent to GSK and publicly published by Elliott on Thursday, in which the media fund activist criticizes “poor management over the years” for its poor stock price results.
The 17-page letter written by Elliott states the first public confirmation that the Financial Times built a significant stake in GSK, with a market value of $ 71.5 billion. revealed in April that the hedge fund took a million-pound stake.
“If allowing GSK to maintain its long-term operating and stock price shortfalls would allow it to continue without urgent action, it would be in the interest of the company. to the President of.
Calls for changes at GSK come as a doctor in the UK confirmed last week that it would continue with the intention of separating the health division from consumers next year, leaving a modest business entirely focused on biopharmaceuticals.
While defining these plans, Walmsley launched a strong defense of its leadership, pledging to transform the UK pharmaceutical group by trying to represent the “agent of change” because it was focused on investing in its drug pipeline.
Walmsley, a former L’Oréal executive who joined GSK in 2010 and as CEO in 2017, has had questions about his experience in pharmaceutical products that run the consumer business.
Following the investor’s update, GSK shares rose and analysts were very positive with the company’s stated goal of achieving annual sales growth of more than 5%.
Elliott said in his letter that updating investors was “an important step in the right direction,” “but it was not enough to address GSK’s credibility challenges.”
GSK told management to renew its level by immediately hiring independent directors who specialize in biopharma or consumer health, who would join the committees to interview external and internal candidates.
“Elliott does not advocate a specific outcome, but advocates a strong process because it is important for the board to assure current and future shareholders that the new leadership of both companies has been selected through a credible process consistent with good corporate governance practices.”
FT reported at the beginning of the month Some GSK shareholders have stated that Elliott has also privately questioned whether Walmsley should be behind the spin-off.
Elliott also asked the commission to evaluate offers to buy for the health division of consumers, a sign that it could still push ahead with the sale of the unit if a bid arises from a private equity or industry rival.
Elliott added that the commission should introduce stronger performance incentives, increase long-term profit targets and avoid fully integrating its pharmacy and vaccine business.
Paul Singer creates and directs in New York. Elliott manages about $ 42 billion in assets and has created a reputation as a fearsome investment activist with campaigns from AT&T, BHP and SoftBank.
The investment in GSK has been exhausted from its London office, managed by Singer’s son Gordon and led by portfolio managers Mark Levine and Sebastien de La Riviere.
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